Joyner Companys income statement for Year 2 follows:

Sales	$ 709,000
Cost of goods sold	339,000
Gross margin	370,000
Selling and administrative expenses	151,300
Net operating income	218,700
Nonoperating items:
Gain on sale of equipment	7,000
Income before taxes	225,700
Income taxes	67,710
Net income	$ 157,990

Its balance sheet amounts at the end of Years 1 and 2 are as follows:

	Year 2	Year 1
Assets
Cash	$ 150,290	$ 61,600
Accounts receivable	220,000	132,000
Inventory	319,000	281,000
Prepaid expenses	9,000	18,000
Total current assets	698,290	492,600
Property, plant, and equipment	626,000	505,000
Less accumulated depreciation	165,200	130,500
Net property, plant, and equipment	460,800	374,500
Loan to Hymans Company	44,000	0
Total assets	$ 1,203,090	$ 867,100
Liabilities and Stockholders' Equity
Accounts payable	$ 314,000	$ 258,000
Accrued liabilities	46,000	53,000
Income taxes payable	85,600	80,100
Total current liabilities	445,600	391,100
Bonds payable	199,000	110,000
Total liabilities	644,600	501,100
Common stock	340,000	275,000
Retained earnings	218,490	91,000
Total stockholders' equity	558,490	366,000
Total liabilities and stockholders' equity	$ 1,203,090	$ 867,100

Equipment that had cost $31,000 and on which there was accumulated depreciation of $11,100 was sold during Year 2 for $26,900. The company declared and paid a cash dividend during Year 2. It did not retire any bonds or repurchase any of its own stock.

Required:

1. Using the indirect method, compute the net cash provided by/used in operating activities for Year 2.

2. Prepare a statement of cash flows for Year 2.

3. Compute the free cash flow for Year 2.

Joyner Company
Statement of Cash FlowsIndirect Method (partial)
		0
		$0

Decrease in accounts payable

Decrease in accounts receivable

Decrease in accrued liabilities

Decrease in income taxes payable

Decrease in inventory

Decrease in prepaid expenses

Depreciation

Gain on sale of equipment

Increase in accounts payable

Increase in accounts receivable

Increase in accrued liabilities

Increase in income taxes payable

Increase in inventory

Increase in prepaid expenses

Loss on sale of equipment

Joyner Company
Statement of Cash Flows
For Year 2
Operating activities:
Investing activities:
		0
Financing activities:
		0
		0
Beginning cash and cash equivalents
Ending cash and cash equivalents		$0

Additions to property, plant, and equipment

Cash dividends paid

Decrease in accounts payable

Decrease in accounts receivable

Decrease in accrued liabilities

Decrease in income taxes payable

Decrease in inventory

Decrease in prepaid expenses

Depreciation

Gain on sale of equipment

Increase in accounts payable

Increase in accounts receivable

Increase in accrued liabilities

Increase in income taxes payable

Increase in inventory

Increase in prepaid expenses

Issuance of bonds payable

Issuance of common stock

Loan to Hymans Company

Loss on sale of equipment

Proceeds from sale of equipment